Meet the Other Phone. A phone that grows with your child.

Meet the Other Phone.
A phone that grows with your child.

Buy now

Please or to access all these features

SAHP

A place for stay at home mums and dads to discuss life as a full-time parent.

retirement plans

9 replies

captainproton · 26/05/2015 13:53

I am not sure if anyone worries about this or if it's just me. I am not really clued up on pensions, but how does it work when your DH retires, and if he dies before you? Do I get his pension? Or do I need to make my own retirement plans now? I've got a small work pension from before I quit last year but it's not much, and if I continue to pay NI once youngest reaches the age when I am no longer entitled to free contributions I should get state pension. Can someone explain pensions to me, and also what are your plans for retirement as it were. BTW my DH is 15 yo than me so I am more than likely going to outlive him. Might not though obviously.

OP posts:
howabout · 26/05/2015 15:56

My layman's points to think about would be:
If you have 30 qualifying years NI from work plus childcare then I also think you get your state pension at retirement age. My understanding is that DH state pension entitlement dies with him.

On DH private pension it depends on what sort of pension it is. If it is a final salary scheme then there are usually survivor benefits at a reduced rate. If it is a defined contribution scheme then the new pension changes will improve the situation and make it possible for the pension fund to transfer to you, even after retirement if no annuity is purchased.

You could also look at setting up your own private pension, where up to £3,600 you still benefit from basic rate tax relief even if you have no earnings. How much this costs you as a couple would depend on DH tax bracket and whether he is able to contribute to his pension instead through salary sacrifice. It does give you some independent planning though and also may be more tax efficient when withdrawing funds when you are 55 because you have a personal allowance.
Also as you are married if you divorced pension funds would form part of any settlement.
Since we are being morbid I would also look at life insurance as this is usually an added extra of workplace pensions which you lose when not working.

I have been trying to guage my thinking on this recently so am very interested in what others have in place.

morethanpotatoprints · 26/05/2015 18:48

I know nothing about pensions but have made provision in other areas for retirement.
Very interesting so am lurking a bit.
We purposely decided against it having lived through the time when older family members lost every penny then had saved in pension funds.

captainproton · 26/05/2015 20:25

Thank you howabout, DH does have a pension through work, it's not final salary and he does get it deducted each month with employer chipping in too. He will be fine I suspect but just wonder what happens to me if I am widowed. He has life insurance through his employer also, but I don't. I did look into it but owing to AI condition I have And other factors it is just too expensive at the moment. If I die now, DH would probably end up selling up and moving in with his brother. They used to live together for a long time and he is very close to our children. So that is the plan B. I just don't want to get to 65 and realise I just have state pension to live on. I could downsize I suppose if I became a widow and live on that. If I end up in care I suppose that is what happens anyway, you sell your house to pay for it. I am trying to work out if I need to pursue a career again once the kids are older or just make do with a part-time job doing anything really to keep my hand in. I would like to do more volunteering, I love what I do already and I don't want to get my heart set on it if it's going to mean being old and poor.

OP posts:
ElizabethG81 · 26/05/2015 22:16

You need to check out the exact terms of his pension. Most would only leave a fraction of it to a spouse, so I wouldn't rely on this if I were you. I think rules are also changing in relation to the number of years of NI contributions needed for the full state pension, so check that out too - I've got a feeling it's increasing to 35 years of NI contributions. You're right that you'll be getting the NI credits if you are in receipt of child benefit, but it's worth checking how many years you'll have to pay voluntary contributions to make up the new full state pension. I'm fairly certain the new state pension won't have any provision for widowed spouses.

I'm not a SAHM, but if I was these are the things I'd think about doing:

  • Having my own personal pension - you can get tax relief for this even if you're not paying tax - if you contribute £2880 pa, the government will top it up to £3600. You can contribute more but wouldn't get more tax relief.

  • If you're wary of pensions, think about investing in property - in your name or joint names.

  • Other savings in your name.

I know no-one ever wants to think about it, but you have to think about divorce too, and pensions aren't always awarded as part of a settlement.

If you do return to work, if possible look for work in the public sector - i.e. an area that still offers good pensions and would enable you to build up a pension of your own.

howabout · 27/05/2015 11:04

ElizabethG81
I had been struggling to find a clear explanation on the NI credit changes and the state pension. I have now found the section entitled "New state pension" on www.gov.uk and it includes an explanatory leaflet. You are right in thinking a complete record will be 35 years. Between 10 and 35 years benefits are prorated and there is the option to buy years, but in general no longer the option to rely on a spouse's record. This is quite a big change which I think needs more publicity. Also, if I were younger I would worry that the 35 years may be increased in the future. I had also not realised that NI credits are only attached to child benefit for children under 12, although again this does not directly affect me. I did know you should continue to register for child benefit even if your spouse earns too much for you to be paid it to gain NI credits.

I agree about looking at other savings, but personally I am wary of investing in property as it concentrates risk in one place, especially if you already have a significant property investment in your home.

I also agree having assets in your own name is a good idea. I have been very happily married for over 20 years but I keep a "running away" fund. It also gives a source of easily accessible funds in the event of emergencies and better tax planning scope. However I am always a bit worried when I hear married people talking in terms of his and her assets and liabilities because in most cases they are in fact joint regardless of whose name is on the paperwork.

captainproton it sounds like your DH pension is a stakeholder pension like my DH. I agree you need to check but in our case if DH dies before pension age I inherit the whole fund and unless we later converted it to an annuity, which under the new rules would no longer be required, this would continue to be the case. This is very different from defined benefit pensions or already annuitized pensions where survivor benefits are generally 50% or less of the pension in payment. We have a whole series of pension funds from both our previous and current employment and our own private provision. I am in the process of collating them all to better plan our retirement and I would recommend this.

morethanpotatoprints you are not the only person I know who is wary of pension funds and I don't think the constant confusing changes help matters any. Just on the historic point though: most private pensions used to be closer to collective insurance products than individual investment products held collectively. The distinction is important as in old schemes investors had no direct ownership of the underlying assets of the fund. This is why investors lost money if the insurance company folded. This would also be the case if a bank were allowed to fold and you were holding bank accounts above the government guaranteed limit. However if an investment company is managing your investments on your behalf in a stocks and shares ISA or stakeholder pension you are usually the beneficial owner of the underlying assets and the company is regulated to ensure it is maintaining safe custody of your assets. You are still exposed to losing all your assets in a market crash though and there have been frauds and Ponzi schemes so I always make sure I know who the custodian is. This is especially important if a bank or financial advisor is marketing an investment product which will ultimately be managed by a third party. I also tend to avoid anything offering any sort of "guaranteed" or "smoothed" return as to me they imply transfer of beneficial ownership.

Again I am not an expert but I do try to keep up with issues as they affect me. Part of the problem is that everyone's circumstances are different. Also there is only so much planning anyone can do for an uncertain future.

morethanpotatoprints · 27/05/2015 11:20

howabout

Thank you for your post, it sounds very confusing and I'm not sure I'd be able to sleep with all that going through my mind.
I'm very low risk when it comes to savings I won't even have a stocks and shares ISA Grin I know its a bit daft.
I also realise pensions have improved a lot since those days with little protection, but I'm just the cautious type.
Particularly enjoying this thread though and hope to learn more.

NotBeingRudeBut · 27/05/2015 11:33

This is a really interesting thread. I'm 34 and starting to think about pensions as I'm about to become a SAHM (have worked 13 years in public sector so have pension from that).

Didn't know about NI credits if receiving child benefits - is this an automatic thing and are they credited to me or DH or whoever isn't working (DH works full time).

So confusing......

captainproton · 27/05/2015 14:31

This evening I'm going to dig through DHs pension statements and details. He has 3, one from his previous employer, an old one from his current employer which is now closed (is that the right term) and the one his employer replaced it with..... We are not eligible for CB but I have already registered in order to get NI contributions. I have paid NI for 14 years already, my youngest is 1 nearly 2. Will think about what I shall do, right now our focus is the children and mot getting me back to work.

OP posts:
howabout · 27/05/2015 14:32

Morethanpotatoprints the only time I really consider getting a job is when I feel the need to get all this stuff out my head. My DH leaves me to manage our joint finances and occasionally even let's me bore him rigid with it all though, so that mostly solves the problem Grin

NI credits should be automatic if you receive CB for a DC under 12, but you can double check via www.gov.uk.

New posts on this thread. Refresh page
Swipe left for the next trending thread